B u r n i ng e c o n o mic i s s u e s

Transcription

1 B u r n i ng e c o n o mic i s s u e s Naira depreciates to seven month low of N366/$, on speculative demand Brent oil declines by 0.35% to $79.45pb, after crossing $80pb External reserves slides to $47.75bn Diesel price jumps 6.8% to N /litre Lagos subsidizes lake rice with N1.05bn

2 E c o nomic N e ws Good News Power output declines by 4.66%, still above 4,000MWh/h FGN to build 6 more fertilizer plants nationwide Bad News Higher diesel price will push up logistics & distribution costs Naira weakness could stoke imported inflation

3 Pow e r G e n e r ation a n alysis & I m p act May 22 nd : Average power output at 4,006MWh/hour (down 196MMWh/h) Total gas constraint was 2,254MWh/h; Grid constraint was 608MWh/h; Water constraint was 95MW Naira equivalent of power loss: N1.42bn (annualised at N519.03bn) Power Output (MWh/h) 4,400 4,154 4,189 4,202 4,200 4,031 4,006 4,000 3,800 3,706 3,592 3,600 3,400 3,200 State Temperature Kano 40 C ( +4C ) Lagos 31 C (0 C) Abuja 34 C (+3C)

4 Price Inelastic Price Elastic D o m estic c o m modity p r i c e m ov ement Palm Oil (25L) Commodities C U R R E N T P R I C E S ( L A G O S ) CURRENT PRICES N10,000 PREVIOUS PRICES DIRECTIONAL CHANGE Lagos Price 1 year Low 1 year High N10,000 N6,000 N25,000 Semolina(10kg) N3,000 N3,000 N1,800 N3,500 Old Yam(large tuber) N1,700 N1,700 N400 N1,700 Tomatoes (50kg) N8,000 N8,000 N8,000 N28,000 Garri (50kg) (Yellow N7,000 N7,000 N7,000 N16,000 Rice (50kg) N15,500 N15,500 N13,000 N22,000 Flour (50kg) N10,000 N10,000 N8,500 N11,000 Sugar (50kg) N14,900 N14,900 N8,000 N20,000 Beans (Oloyin) (50kg) N28,000 N28,000 N12,000 N34,000 Cement (50kg) N2,550 N2,550 N1,400 N2,700

5 C o nsumer G o o ds Current P r i c e L a gos GOODS Street price Supermarket price % difference Pepsi (50cl) N120 N100 20% Beer (60cl) N250 N % Bread Loaf N350 N % Indomie (1 carton) N1,900 N2, % Gala (big size) N100 N100 0% Domestic prices remain flat

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7 Commodity in focus - SUGAR Total global output (2016/2017): 167.8mn tonnes 2.13% above 2015/2016 output Sugar Production (m tonnes) World s top producers: Brazil, India, EU World s top consumers: India, China, Brazil Uses: breweries, confectionaries, pastries, soft drinks, ice-cream Brazil India Other Latin America EU Thailand

8 Commodity in focus - SUGAR Global annual sugar consumption to expand by an average of 1.4% in 2017/ /19 Increasing demand will continue to be underpinned by population growth and rising incomes in emerging markets Urbanising populations are adopting the food and drink habits of developed countries Sugar acts as a sweetener in food & beverages And a binding and preserving agent

9 Commodity in focus - SUGAR Demand growth for sugar is set to moderate but China will remain a key consumer Consumption in India is forecast to recover as prices normalize Changing consumer tastes will boost demand growth in Africa Sugar Consumption 2014/ / / / /19 Total Sugar Consumption (m tonnes)-lhs % Change -RHS

10 S U G A R p r o d u c t i o n i n N i g e r i a Total demand: approx. 1mn tonnes Total Output (2016/2017): 70,000 tonnes (0.04% of global output) Demand gap: approx. 900,000tonnes Nigeria is the largest importer of sugar in SSA Annual sugar imports: Approx. $100mn Largest importers: Dangote, Golden Sugar and BUA

11 L a rgest c o n s umers o f s u gar Listed users: Nestle, Dangote Sugar, Guinness Revenue 10% - N67.46bn 15% - N34.93bn 31% - N41.14bn Profit Before Tax 3% - N8.61bn 98% - N4.35bn 19% - N8.39bn Profit After Tax 10% - N67.46bn 40% - N2.96bn 11% - N5.28bn Dividend Yield 2.60% 0.62% 14.04% Source: FAOSTAT, FDC Think Tank

12 S tock m a r k e t NSE ASI Consumer goods sub index 0.25% to 40,150.55pts on May 23 rd Share Prices (N) 0.47% to pts Daily % Change ( May 22 May 23) YTD (%) Nestle 1, Honeywell Flour Mills Cadbury NB Dangote Sugar Unilever

13 O i l P r i c e s Brent price 0.35% to $79.45pb Following Trump s unimpressed statements about US-China trade talks US sanctions against Iran and Venezuela to mop up global supply

14 O i l m a r k e ts t o day O I L BRENT 0.72% 18.14% $79.00pb WTI 0.51% 18.88% $71.83pb NATURAL GAS % $2.9MBtu

15 Agric commodities Wheat Corn Cocoa Sugar Graphic Design Wheat futures down 0.25% to $5.31/bushel Corn futures up 0.24% to $4.09/bushel Cocoa prices gains 1.12% to $2,618/mt Sugar jumped 1.65% to $0.12/pound As India hikes tax on wheat imports As Brazil falls short of planned subsidy program On delayed rains in Ivory Coast and Ghana India is set to approve a minimum price for sugar.

16 O u tlook Oil p r i c e s Market expects higher price in the long term 5-year futures jumped 10% to $63pb Prices to stay above $75pb in the short term

17 O u tlook agric p r i c e s Grains US and China are working towards a win-win bilateral deal. This will support grain prices. Softs SUGAR Market is gradually recovering from glut, prices will continue to strengthen COCOA Prices are expected to trade higher in the short term due to weather concerns in West Africa